No human mind can comprehend all the knowledge which guides the actions of society. — F.A. Hayek

Reply to Seth

Seth disagrees with Timothy Sandefur’s challenge of Hayek’s spontaneous order paradigm and its purportedly normative implications. I tend to agree with Sandefur, and see Hayek’s concept as a good conceptualization of complex systems but inadequate to justify favoring one institutional arrangement over another. Seth objects:

Sandefur oversimplifies. He wants to classify systems into absolute categories while ignoring the existence of messy continua. While it is possible to nitpick, we can easily classify the United States as a liberal market economy, and Cuba as a socialist economy. It would be dishonest to deny these categorizations; we wouldn’t say that because the U.S. has public schools, and that because Cuba has a money supply, we simply can’t distinguish any difference between these economies.

I think this is a misreading of Sandefur. He’s not trying to make a neat divide between spontaneous and constructed orders; to the contrary, he is acknowledging that the divide is more blurred than even Hayek realized. It depends on perspective: the U.S. can be seen as a constructed order, and likewise Cuba can be seen as but one more experiment in a larger spontaneous order. Sandefur surely wouldn’t deny the differences between the nations, but he is saying that depending on the choice of perspective, the differences can be either infinite or nonexistent:

Hayek exploited his concept’s flexibility when he said that “deliberate efforts… [to] improve the existing system by laying down new rules” were actually consistent with the principle of spontaneous order because “it remains true that the system of rules as a whole does not owe its structure to the design” of planners. The phrase “as a whole” is doing all the work here. As a whole, no order is constructed. The term “as a whole” here represents Hayek taking a convenient and unwarranted step back to look at the system through a lens so wide that anything, no matter how rationally constructed, can still qualify as part of the spontaneous order.

Sandefur notes that this is how both the opponents and proponents of gay rights are able to use Hayek’s distinction in their arguments. Opponents say “Stop planning our social norms and systems! They’re spontaneous!” Proponents say “Stop trying to prevent the natural motion of our spontaneous order!” The concept becomes meaningless: it is valid as a perspective, but useless to form imperatives. We could say to socialists “Stop trying to plan our economy! It’s spontaneous!” They retort “Stop trying to prevent our spontaneous experimentation!”

History proved Hayek correct, but departure from spontaneous order is only a proximate cause of socialism’s failure. There are more fundamental arguments as to why socialism fails, e.g. perverse incentives, economic calculation, etc. These arguments were made against socialists’ original claims that socialism would produce more wealth than capitalism. They dropped that claim circa 1991, but it was all the rage (even corroborated in Paul Samuelson’s famous intro textbook) all the way up until then. Socialism always had its egalitarian element, but originally the idea was that capitalism was merely a prerequisite for socialist utopia. Socialist systems fail to efficiently utilize localized knowledge. But it is this “is” that begets the “ought” – it is better to use prices and property rights because they lead to greater efficiencies. Though prices and property rights can be seen as a spontaneous order, it is not the “spontaneity” that leads to the normative statement; it is the positive observation that the price system works. And which is it? Are property rights a constructed or a spontaneous order? It depends on how you choose to look at it.

I think the great virtue of the concept of spontaneous order is that it helps us to wrap our minds around chaotic and abstract systems – and subsequently, to overcome our cognitive biases. Folk intuition leads to the conclusion that individuals pursuing their separate interests will lead to social destruction – but this tribal mentality is proven wrong in elegant portrayals of spontaneous order. Smith’s invisible hand and Hayek’s analogous spontaneous order are deft distillations of complexity, but they have no necessary normative implications.

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[…] 3, 2010 by Seth Goldin Greg believes that spontaneous order can be too broadly applied so as to become meaningless. Sure, if the analysis is too broad, then socialist states could be viewed as federalist […]